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Secured Loans

Secured business loans often are term loans provided for a fixed time period on either a P&I or IO schedule that are ‘secured’ by a physical asset that has an assessable value. The critical thing about secured business loans is that the security must be owned by the business itself or one of the business's directors. Common forms of collateral used for secured term loans include residential property, commercial property, vehicles, machinery or other equipment.

The need to know

Similar features and structures to a residentially backed home loan.

Terms of 12 months all the way to 30 years depending on the product.

Key feature is it must be backed by collateral from either the business or a director of the business.

Secured business loans typically have longer repayment terms than unsecured business loans.

Secured business loans often result in lower interest rates when compared to unsecured or other forms of business finance given the collateral backing the transaction.

The loan must predominantly be for a business purpose and it is likely the directors of the business will need to sign a declaration detailing this.

Categories of loans

There are multiple types of secured business lending products available depending on loan need and profile of the asset being used as security.